Unhappy client cannot re-raise damages action against former solicitors after lawyer settled claim on his behalf

Judges in the Inner House of the Court of Session held that the pursuer was “bound by the actings of the solicitor acting on his behalf” and the defenders were therefore entitled, in the circumstances of the case, to rely on the “ostensible authority” of the lawyer acting for the pursuer to settle the action for damages.

Lord Menzies (pictured), Lord Drummond Young and Sheriff Principal Pyle heard that Stanley Mazur raised an action for damages of £40,000 against Primrose & Gordon WS for “breach of contract” and “professional negligence” after receiving “inadequate and ambiguous” advice, in advising him to allow a petition for his sequestration to proceed.

In preparation for the proof an expert report on behalf of the pursuer was lodged which concluded that the defenders’ equivocal advice to the pursuer had “fallen below the standard which the pursuer ought to have expected from an ordinarily competent solicitor”, following which the defenders contacted his solicitor, Hugh Grant of Grant Brown Lindsay, offering to settle the action by paying the pursuer the sum of £10,000 together with the expenses of the action in full.

Mr Grant recommended acceptance, but the pursuer indicated that the sum quoted was not sufficient and it was agreed that Mr Grant should seek an enhanced offer.

After further efforts to encourage the pursuer to settle failed, Mr Grant telephoned Mr Mazur’s home and persuaded Mr Mazur’s wife to accept the offer and the proof was discharged for settlement of the cause.

As a result, the pursuer sent an email to the defenders’ solicitors indicating that he had instructed the arrangements made be cancelled and that he intended to continue the action with another solicitor.

The sheriff accepted that Mr Mazur had made it clear to Mr Grant that the offer tabled by the defenders was not acceptable and expressed sympathy for the position in which Mr Mazur found himself.

However, he concluded that the defenders’ solicitors were entitled to take the view based on the communications which they received in writing from Mr Grant that the action was settled and accordingly the pursuer was barred from seeking to re‑raise the action against the defenders with a view to seeking enhanced damages.

Mr Mazur appealed against the sheriff’s decision, but the Sheriff Principal agreed that the defenders should be granted absolvitor from further proceedings, prompting the Mr Mazur to appeal to the Inner House.

The judges observed that while it appeared that Mr Mazur “has not been well served by successive legal advisors”, his remedy was to raise an action against his former solicitors.

Delivering the opinion of the court, Lord Menzies said: “We are unable to detect any error of law in the approach adopted by the sheriff or the Sheriff Principal, and we agree with their disposal of this matter.

“The question of the ostensible authority of a solicitor acting as procurator in the sheriff court to compromise an action regardless of the instructions of the client was clearly stated in Mowbray v Valentine.

“That view is binding on us; in any event, we are in complete agreement with it. We can find no sound basis on which to distinguish Mowbray v Valentine from the circumstances of the present case.

“The question is whether a party to litigation is entitled to rely on the ostensible authority of the solicitor acting for the opposite party to compromise an action. For sound policy reasons it is our law that he is entitled to do so.

“Of course, if he becomes aware that the solicitor for the opposite party is no longer instructed by that party, or that there is some other substantial and material defect in the relationship of principal and agent on the other side, that might well change matters – he could no longer rely on the ostensible authority of a person whom he knew not to be acting as agent for the principal. However, there is no suggestion of such a situation in the present case.”